Key facts
- UK housebuilder shares surged on Tuesday morning.
- Prime Minister Andy Burnham announced an initial £10 billion investment in affordable housing.
- The funding aims to build thousands of council, social, and affordable homes.
- Vistry received £350 million to construct 3,000 affordable homes.
- The plan includes building 70,000 homes outside London, with 60% for social rent.
- A separate £6 billion will be allocated for London housing later.
Shares in the UK's largest housebuilders experienced a significant increase on Tuesday morning following Prime Minister Andy Burnham's announcement of an initial £10 billion investment aimed at constructing thousands of affordable homes.
Burnham stated that the funding would be directed towards building "genuinely affordable homes, most of them for social rent, in the places where families are waiting longest." This announcement provided a much-needed boost to the sector, which has been contending with a slowdown in the British housing market and financial pressures exacerbated by rising costs, reportedly linked to the Iran war.
Vistry, a prominent FTSE 250 firm, saw its shares jump over 12% to 301p in early trading. The company informed investors that it had received £350 million from the government to build 3,000 affordable homes as part of the initial funding tranche. Vistry's chief executive, Adam Daniels, described the announcement as a "much-needed stimulus" that would create over 73,000 new homes across the sector.
While the initial £10 billion is earmarked for building 70,000 homes outside London, with approximately 60% designated for social rented housing, it represents a slight modification from Burnham's earlier proposal to dedicate the entire program to council homes. The plan now includes a mix of subsidized housing types, aligning with previous commitments. An additional £6 billion is slated for housebuilding in the capital at a later stage.
Other major housebuilders also saw gains. Barratt Redrow, a FTSE 100 constituent, gained nearly one percent, while Persimmon also led the FTSE 100. Berkeley, another FTSE 250 listed company, saw its shares jump two percent to 3,594p. These gains come after a period of difficulty for the sector, with companies like Barratt Redrow cutting back on land acquisition due to macroeconomic uncertainty, and Berkeley having previously halted land-buying entirely due to increased costs and regulation.